On January 10, 2025, the United States and the United Kingdom sanctioned Gazprom Neft and Surguneftegas, two major Russian oil companies that, together, produce more than 1 million barrels of oil per day. The sanctions were reportedly issued to restrict a key source of revenues used to support Russia’s brutal war against Ukraine and other harmful foreign activities. According to the UK Government, this is the first time that the United Kingdom and the United States have directly sanctioned the two Russian oil giants that produce approximately $23 billion worth of oil a year based current oil prices.
The UK Government’s designations of Gazprom Neft and Surguneftegas were issued pursuant to Russia (Sanctions) (EU Exit) Regulations 2019 (“the Russia Regulations”), which subjects the designees to asset freezes and trust services sanctions. The United Kingdom also issued General License INT/2025/5635700 under regulation 64 of the Russia Regulations to enable UK persons to continue to engage in transactions related to exempt Russian oil projects. The general license lists Sakhalin-2 project as an exempt project and provides that transactions related to this project are permitted until June 28, 2025.
In addition to the designations of Gazprom Neft and Surguneftegas, the U.S. Department of the Treasury’s Office of Foreign Assets Control sanctioned multiple individuals and entities involved in the Russian oil trade, including Russian energy officials, Russian oil traders and Russian oilfield service providers, and more than 180 vessels used to transfer Russian oil, many of which are members of Russia’s “shadow fleet.” The United States also designated Sovcomflot, Russia’s state-owned shipping company and fleet operator that specializes in the transportation of hydrocarbons and provides servicing and support to Russia’s oil production sector. These designations were imposed pursuant to Executive Order 14024 for operating or having operated in the energy sector of the Russian economy and EO 13662 for operating in the energy sector of the Russian economy.
The United States also issued a new determination pursuant to EO 14024 that authorizes the Secretary of the Treasury, in consultation with the Secretary of State, to impose sanctions on persons determined to operate or have operated in the energy sector of the Russian economy. A second determination was issued pursuant to EO 14071 that prohibits the provision of U.S. petroleum services to persons in Russia – a prohibition that takes effect on February 27, 2025.
In addition, OFAC issued several Russia-related general licenses (“GL”) pursuant to the Russian Harmful Foreign Activities Sanctions Regulations (“RuHSR”), 31 CFR part 587. GL 8L temporarily authorizes wind down transactions related to energy until March 12, 2025, while GL 115A permits certain transactions related to civil nuclear energy until June 30, 2025. GLs 117, 118, 119, and 120 authorize, until February 27, 2025, various transactions, including wind down transactions, involving entities or vessels blocked on January 10, 2025. In light of the new determination issued pursuant to EO 14071, OFAC issued GL 121 to authorize certain petroleum services related to specified projects, including Sakhalin-2, until June 28, 2025. OFAC also revoked GL 93, which had authorized transactions involving certain Sovcomflot vessels.
One general license was issued pursuant to Ukraine-/Russia-Related Sanctions Regulation, 31 CFR part 589. OFAC issued GL 26 to authorize certain transactions pursuant to the RuHSR that would otherwise be prohibited by EO 13662, including transactions authorized by a general license. To further clarify the provisions in the new general licenses and determinations issued on January 10, 2025, OFAC issued five new Russia-related Frequently Asked Questions (FAQs 1213-1217) and amended 14 others (FAQs 967, 976, 977, 978, 999, 1011, 1012, 1017, 1117, 1126, 1182, 1183, 1201, and 1203.